Demand exceeds supply but they refuse to expand

So here is an interesting problem for you: Suppose you start a business and it proves wildly popular. So popular that people are lining up out the door in Chicago in January. It seems obvious that you should look to expand. But what if you have the business set up the way you want. That is, you like the way things are; it suits your mind set and philosophy. Is it ok to effectively tell your customers to take a hike?

That’s essentially the question being asked by an article in the New York Times (Small by Choice, Whether Clients Like It or Not, Jan 13). Let’s start with the obvious: Any time the Gray Lady is willing to invoke the Soup Nazi, it’s probably worth reading the article. This article is about Great Lake, a pizza shop on the North Side of Chicago. It got written up in GQ for having one of the best pizzas in the country. Next thing you know, tremendous demand. The problem is that this was never set up to be a large operation. When comes to making the pizzas it is essentially a one-man show. The co-owners of the shop are Nick Lessins and Lydia Esparza and Lessins makes ALL of the pizza down to making the mozzarella and grinding the sausage. (The article is largely an interview with the two owners.) In addition, they aim to use local ingredients and provide high quality at reasonable prices. Consequently, they are pretty happy with the way things are set up:

Mr. Lessins: We really enjoy the work that we’re doing and we don’t want to cheapen it. Consciously or unconsciously — probably both — we’re trying to create a manageable way to earn a living and still maintain our sanity. We value time as much, if not more so, than money.

And they are utterly unapologetic about they way they run things:

Q. Do people get frustrated by the waits? Mr. Lessins: We’ve had a few people get pretty flustered — “What do you mean we can’t be seated? We have to wait a couple of hours?” Like somehow we’ve violated their human rights. Why is it a crime that we’re not open seven days and we’re not seating 100 people?

Q. In online reviews, some customers have complained about rudeness or arrogance. Where do you think that perception comes from? Mr. Lessins: I think that perception of arrogance has to do with the sense of entitlement and a lack of respect for someone wanting to do their job. We’re just trying to do the job the best we can. We’re trying to provide a quality experience for everyone who comes in. In the food service business, it’s assumed that the customers have a set of God-given birthrights when they come into an establishment. It’s like they’ve been wronged in a lot of parts of their lives, and this is their chance to even the score.

Q. What does customer service mean to you? Ms. Esparza: Great service for us is the quality of food we bring to the table.

On top of this, they reject the idea of raising prices because their goal is not to serve just an “elite” crowd.

I have to admit that I find their attitude fascinating. On the one hand, it seems to fly in the face of pretty much every management teaching. They seem utterly unconcerned with customer opinion and are willing to define “service” in minimalist terms all their own. Not aiming for an “elite” crowd sounds very honorable but they have effectively raised prices. It is just that they charging in time and inconvenience instead of dollars. From glancing at Yelp, you need to be lining up at 4:30 to get a seat when they open at 5:00. After that, it’s a crap shoot. I’m out of that market. I would love to try this pizza but this model is incompatible with having kids in tow or be certain that you will be home when you told the baby sitter when you would.

That said, there is something cool about what they are doing. They have a business model — and in particular an operations model — that works for them and they are sticking with it. Compromising on service for them is simply not compatible with their operations. Increasing capacity would mean significant changes in their operations, which would have financial and (apparently) psychological costs. If those are high enough, it makes sense to stick with what you have.

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2 Responses

Actors always say be yourself while acting and this post applies the same philosophy to a business. This post threw me completely out of balance! Thank you for that.

But eventually I would say sticking to your principle goal does make a sense. Every organization forms a “Vision Statement” which describes the main elements of it’s identity.

So probably for for Great Lake the vision is to provide quality of food to everyone. The definition of the “quality” probably stresses on freshness and great ingredients. So Great Lake is just sticking to its vision!

But the other side is can they continue to ignore the portion of customers not happy with their service? Aren’t they hurting their long term prospects?

I saw the lines at a similar place in Barcelona, at the Plaça Reial: Les Quinze Nits. The menu looked interesting and reasonably priced, the lines were too long for me (see a picture here). I had dinner a couple of times at a restaurant nearby (Taxidermista), looking at the long queue while I sipped on a glass of wine.

I think Great Lake can pull it off, if their pizza is consistently worth the wait. It’s easy to see that the wait is part of the cost. There should not be an unhappy portion of customers — the long waits are now well-known and may become part of the experience for patient souls. Being unhappy about a wait you fully expect is a personal choice!

I’m guessing they don’t take reservations, a subject that Marty has explored in his research.